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possible justification for the practice of putting more stocks and options in the packages of managers with a longer tenure in … risk-averse managers. We find that risk-aversion reduces, and in some cases can even revert, the profitability of seniority …
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Empirical and experimental papers find that high-powered incentives may reduce performance rather than improve it; a phenomenon referred to as "choking under pressure". We show that competition for high ability workers nevertheless leads firms to offer high bonus payments, thereby deliberately...
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